NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Portfolio Manager
Mrs. Meera has a PMS portfolio worth Rs 80,00,000 at the start of the year. It grows to Rs 92,00,000 at year end, with no additions or withdrawals. The benchmark returned 12% over the same period. What is the portfolio's excess return over the benchmark?
The excess return is 3%. The portfolio grew from Rs 80 lakh to Rs 92 lakh, a 15% return, and subtracting the benchmark's 12% leaves 3 percentage points of outperformance.
- A3.0%Correct
- B2.0%
- C15.0%
- D12.0%
Explanation
Portfolio return = (92-80)/80 = 15%. Excess over benchmark = 15% - 12% = 3%. 15% is just the portfolio return and 12% is the benchmark return, neither being the difference.
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